TSA data show a 5th-straight week of increasing travelers per day; Germany’s TUI plans to resume flights in July
Shares of airlines took flight Tuesday, amid growing investor optimism over the easing of COVID-19 related lockdown restrictions and as government data showed a continued increase in air travelers.
Southwest Airlines Co.’s stock LUV,
The U.S. Global Jets exchange-traded fund JETS,
The Jets ETF has now rocketed 91.1% since closing at a record low of $8.01 on May 15. Over the same time, the Dow Jones Transportation Average DJT,
Southwest’s stock leapt 12.6% to the highest close since April 15, after UBS’s Walton raised his rating to buy from neutral. That makes Southwest the only stock Walton is bullish on, as he’s either neutral or bearish on the others.
He trimmed his stock price target to $37 from $41, but it’s still 13.8% above current levels.
“We believe [Southwest] is best positioned to weather the current demand drought given their clean balance sheet with relatively low leverage, entirely domestic network, 65%/35% leisure/corporate passenger composition and ample liquidity to manage operations in a depressed demand environment,” Walton wrote in a note to clients.
He expects domestic travel will first pick up with “even larger swaths” of leisure travel than corporate. Walton also expects travel will come back faster in areas of the country with the lowest number of COVID-19 cases, and he believes Southwest’s exposure to those areas is 15% to 20% better than average.
Among shares of other more actively traded air carriers, United Airlines Holdings Inc. UAL,
Also helping fuel investor optimism toward air carriers, data from the Transportation Security Administration (TSA) show that the daily average of travelers that went through TSA checkpoints during the week ended May 23 rose to 262,734, the most since the week ended March 28, according to a MarketWatch analysis of the data.
On Friday, ahead of the long Memorial Day weekend, 348,673 travelers went through TSA checkpoints, the highest daily total since March 22, and four times the COVID-19 pandemic low of 87,534 travelers checked on April 14.
Shares of JetBlue Airways Corp. JBLU,
Tuesday’s rally in travel stocks started in Europe, after a report that Germany-based travel operator TUI AG said it plans to resume flights at the end of July. In addition, Spain said it will lift the mandatory two-week quarantine period for travelers arriving from overseas destinations, starting July 1.
And last week, U.S. carriers started detailing what air travel would look like in a post-COVID-19 world, as they attempted to boost travel confidence. United said it was partnering with Clorox Co. for enhanced cleaning, and with the Cleveland Clinic for ways to keep passengers safe, while JetBlue said it would block the middle seats on some aircraft and the aisle seats on some others.
Travel services stocks also got a nice boost from the more upbeat attitude toward airlines.